Thursday, May 27, 2010

Select MasterCard Payment and Data Services Will be Released via Open API to Worldwide Software Developer Community to Create New, Innovative Payment ApplicationsPurchase, NY, May 25, 2010 - MasterCard Worldwide announced that later this year it will release Open Application Programming Interfaces (Open APIs) for third–party and independent software developers around the world. By opening up previously proprietary payments and data services, developers will be able to create a new wave of e-commerce and mobile payment applications.

The new Open API program is the first initiative from the newly created MasterCard Labs. A new developer portal will also be launched to enable developers to easily sign up for access to all of the Open APIs that MasterCard makes available will also be launched.

Through the portal, MasterCard will provide developers with technical documentation, software development kits (SDKs), sample source code, reference guides, and “virtual sandboxes” for testing new and innovative applications. A developer forum designed to spur collaboration between MasterCard engineers and developers will also be an integral component of the new portal.

“We are excited about tapping into the ingenuity of software developers around the globe to help create the next generation of game-changing payment applications,” said Josh Peirez, Chief Innovation Officer, MasterCard Worldwide. “We feel this will unleash innovation within our industry especially in the burgeoning areas of e-commerce and mobile payments.”

In addition to payments, MasterCard has identified approximately 20 platforms and services that it plans to open up to developers via the portal. These platforms and services provide additional functionality and enhancements to MasterCard’s payment capabilities. The Open APIs will further enhance the development of new applications and systems beyond those currently available, including CRMs, ERPs, online games, merchant e-commerce web sites, eWallets, mobile applications, and payroll systems.

MasterCard payment and data services also could be integrated with other data sources and functions to create “mashups” – new applications that are a result of combining multiple data sources.

“Over the past few years, we have used some of our Open APIs internally to create groundbreaking new iPhone applications, such as MasterCard ATM Hunter and MasterCard Easy Savings,” said Garry Lyons, Group Executive, Research and Development, MasterCard Worldwide. “Opening these and other APIs to the global development community developers will provide developers the opportunity to leverage MasterCard’s leading payment platforms and come up with new ideas that may not have been previously considered or thought possible.”

“In addition, our new Open API program and developer portal will strengthen MasterCard’s position as an industry leader in innovation and give us an even greater competitive advantage as the payments industry continues to evolve,” said Lyons.

Interested developers should contact MasterCard at api@mastercard.com in order to learn more on how to participate in the program. By virtue of the guidelines applicable to the program, all developers will be approved and registered by MasterCard to ensure that MasterCard payment and data services continue to be used appropriately and productively.

Tuesday, May 25, 2010

BUENOS AIRES, May 23, 2010 (IPS) - Textile cooperatives founded by former slave labourers from Argentina and Thailand will jointly launch a new brand of clothing in June to raise awareness about exploitation and promote decent jobs in the garment industry.

On Jun. 4, La Alameda from Argentina and Dignity Returns from Thailand will start selling thousands of T-shirts bearing several different designs under the "No Chains" trademark. They ultimately plan to produce additional clothing items in association with other cooperatives.

"It's a cry of support for decent work and a way to prove that high quality clothing can be produced without having to enslave workers," one of the initiative's promoters, Gustavo Vera of La Alameda, told IPS.

La Alameda first emerged as a community kitchen in 2001, during Argentina's severe economic crisis. It served many undocumented Bolivian workers who had escaped the garment industry sweatshops that had mushroomed in Buenos Aires.

La Alameda's repeated complaints about the dismal working conditions, in addition to a tragic accident at one of the sweatshops in which six people died -- five of them children --, finally focussed public attention on slave labour, which in Argentina largely involves undocumented immigrants.

The workers spend long days toiling without rest, crowded into spaces where they also live with their families. They lack documents and money, and have little freedom to venture outside the premises.

The clandestine factories provide products for major clothing brands, like Puma, Bensimon, Lecoq, Soho and Kosiuko, according to the complaints that former workers filed in the courts. Justice authorities have seized the machinery from some of the workshops, but have yet to sentence those responsible.

Some of the workers joined together to set up a textile cooperative that sells its own brand, Mundo Alameda, and has the backing of the non-governmental AVINA Foundation.

Meanwhile, halfway across the world in Thailand, a group of women laid off without compensation by the Bed and Bath company when their factory shut down founded the Solidarity Factory cooperative, which later became Dignity Returns.

The members of Dignity Returns say that the factory made clothing for brands including Nike, Gap and Reebok, and that they were forced to work extremely long hours. To add insult to injury, their wages were docked if they complained about fatigue.

The two groups, who met in 2009 at an international conference hosted by the Hong Kong-based Asia Monitor Resource Centre, resolved to join forces to make their voices heard around the globe.

The new clothing brand will be launched simultaneously in Buenos Aires and Bangkok.

On the No Chains website, their position is clear: "The clothes produced in typical garment factories trap workers in chains -- in chains of debt, chains of control by bosses who care about money and not workers -- chains of global production, where many parties grab profits that come from the blood of the workers."

That is why it is not just about launching a brand or a new self-managed venture, but also about calling attention to the need for industrial production that respects the dignity of workers, without exploitation or slavery, according to the promoters.

"Through purposeful action we are denouncing the persistence of slave labour, which has global markets and which leads major brands to take advantage of vulnerable groups and of lax legislation in order to impose forced labour in various parts of the world," Vera said.

The cooperatives held an international contest for T-shirt designs, and of the six winning motifs, two came from Argentina, and one each from Hong Kong, Indonesia, South Korea and the United States.

The cooperatives began production in time to meet the launch date, and the idea is to distribute the clothing by consignment through various non-governmental organisations and trade unions.

The next goal, said Vera, is to expand the network to include cooperatives and society at large in the anti-slave labour campaign. There are talks under way to incorporate two more cooperatives, from the Philippines and Indonesia.

"Within a few years we want to have 20 to 30 cooperatives from different countries in the developing world," he said. There are also plans to diversify the brand to other types of garments.

According to the organisers, the project is not without precedent. The "Clean Clothes Campaign," led by consumer organisations, promotes sales of clothing that is not produced by slave labour.

But No Chains is the first led by independent cooperatives: "This is the first time that workers coming from the world of slavery are coming together to denounce exploitation and prove that it's possible to produce clothing under decent working conditions," said Vera.

Wednesday, May 19, 2010

Editor's Note: Why I am posting an article about urban zoning in a blog about alternative, local economics and currencies? Because this is a good case study of how politics and economic paradigms have to shift to support the transition to a sustainable local economy. I don't think we have any choice with peak oil and the problems with the global economy. These ridiculous laws about restricting small business need to change. People need to be able to grow large amounts of food in the City. People need to be able to provide services and even sell goods out of their homes in order to relocalize. Laws are skewed to benefit large, profit oriented businesses that can undertake these financial and legal hurdles. Import replacement will happen too slowly in my opinion to save us if City governments don't start getting out the way and instead start helping.

Terraced into the uphill slope of a backyard in a quiet neighborhood in North Berkeley, Sophie Hahn’s vegetable garden looks like many others in the city: planter boxes bursting with kale, lettuce, and cauliflower, a compost bin for green waste, chickens clucking in their coop. The garden produces eight garden beds worth of veggies and sixteen chickens’ worth of eggs—much more food than Hahn’s family could possibly eat.

The oversupply is intentional: while the yard belongs to Hahn, she does no gardening herself. Instead, she hires two professional urban farmers to plant, weed, harvest, and deliver the bounty to her family’s doorstep—and to her neighbors’ doorsteps—once a week. “I don’t even go down there,” the attorney and community activist said one morning last fall. “I’m busy!”

To Hahn, this arrangement makes perfect sense. Instead of hiring a gardener to tend her roses, she hires a farmer to tend her vegetables, thus putting her land to productive use. “If I turn my backyard into edible food plants, that means five or six other families don’t have to,” she says, as the chickens, which produce four to five dozen eggs each week, cluck in apparent agreement. “I spread the benefits to more than just my family.”

But feeding six families costs money, and Hahn has shouldered the set-up costs alone, installing garden beds and drip irrigation, buying seeds, and paying the farmers to coax the land to produce. To recoup those costs, Hahn wants to charge her neighbors a small fee for their weekly food baskets. This exchange, she says, would be similar to a Community-Supported Agriculture (CSA) model, in which people pay a subscription fee to a farm in return for regular deliveries of seasonal food. Since she lives in Berkeley, a city that just last year made building a local food system part of its long-term Climate Action Plan, Hahn figured she would have no problem getting a license from the city to run her small farm.

She was wrong. In fact, the process of getting a license turned out to be so convoluted, and so expensive, that for now she’s given up trying to do it. At a time when it seems everyone wants to bring the farm back to the city, and urban food projects are all the rage, Hahn’s story is a study in just how great a challenge this can be. Her adversary is not an anti-vegetable city official or a NIMBY neighbor—all that’s stopping Hahn is a few bland paragraphs in the zoning code.

Hahn’s backyard farm project started when she moved into her house in late 2006. At that time, she recalls, there was nothing at all in the yard—the previous occupants had laid down a layer of sod, which died soon after Hahn moved in, leaving the yard, she says, “ugly and useless.” Not much of a gardener herself, Hahn didn’t think about what to do with the space until more than a year later, when a flier in the neighborhood caught her eye: A woman named Willow proposed to set up a backyard garden in exchange for room and board. While she thought the flier “lovely,” Hahn was initially skeptical. “Seriously … Willow?” she recalls, rolling her eyes in a just-another-Berkeley-hippie sort of way.

But one phone call changed her mind. Willow Rosenthal was the founder of West Oakland’s food security project City Slicker Farms and about as far from a dreamy hippie as raspberries are from ramen. When she looked at Hahn’s yard, she saw potential. A veteran urban farmer, Rosenthal plans intensive gardens—so intensive, she says, that she only reluctantly concedes space for a picnic table. Hahn’s forty-by-sixty-foot backyard area, Rosenthal thought, could easily feed five or six families. The two hatched the idea to create a neighborhood-scale CSA, with Hahn lending land that would otherwise go unused to two farmers—in this case, Rosenthal and her assistant Laurel Sharp—who would manage its daily operation.

The problem is that Berkeley’s zoning code says nothing about a neighborhood CSA, and its absence is significant. Technically, such an operation would be considered a business, since money changes hands. But Hahn’s North Berkeley neighborhood is strictly residential. Its zoning code allows people to run small, low– or moderate-impact in-home businesses but mandates that all activity take place indoors. It also forbids “customer visits,” “handling or transport of goods or products” on-site, and “offensive or objectionable noise, vibration, odors, heat, dirt, or electrical disturbance perceptible by the average person.” An outdoor operation that uses a pickup truck and a compost pile, and would require customers to pick up vegetables, is not allowable under the code.

Hahn and Rosenthal discovered all this when they called the city’s health and planning departments to see what would be required to get a business license. While all the city officials they talked to said they supported the project in theory, they said that legally, there was no way to make it work. One official, says Hahn, described the farm as a “high-impact home occupation.” If Hahn and Rosenthal wanted to go ahead with the project, they were told, they would need a special exemption, which would require a public hearing, six to eight months of waiting, and close to $4,000 in fees. After months of haggling, they pulled their application last summer and decided to regroup the following season. “We didn’t think it was going to be so complicated,” says Hahn.

Berkeley city planning director Debbie Sanderson agrees that while a backyard CSA sounds like a good idea, as the laws are currently written it is unquestionably illegal. While the city could change its code, either under the direction of the city council or in response to a citizen petition, the processis lengthy and complex. The most recent change, which created a provision allowing in-home teaching, took nearly a year to implement, Sanderson says. Still, she says, the code is a living document: “Life in the world is always changing, so the code has to change too.” Indeed, the question of how to integrate agriculture into urban landscapes has started to pop up in American Planning Association journal articles in recent months—one article analyzed the cities of Portland and Vancouver—but it hasn’t come up in Berkeley until now.

Decades ago, when Berkeley’s zoning codes were written, people wanted cities to be urban. Ornamental landscapes demonstrated leisure and wealth, a lifestyle different from working on the land. Far from encouraging backyard farms, city planners dismissed them as relics of the past. It’s only recently that people began transitioning to backyard farms. (Or, as Hahn prefers to call them, “edible gardens”—“When you say ‘farm,’ people think of tractors and Porta-Potties,” she says.)

“The bottom line is that the code didn’t contemplate this,” says Hahn. “It anticipates piano lessons, college counseling, therapy.” In other words, quiet in-home businesses. This makes sense to her. “I don’t want, say, a car repair shop in the yard,” she says. “But edibles grow as quietly as flowers.”

Hahn is not the first would-be backyard farmer to encounter this set of problems. In an era of E. coli outbreaks, high food prices, and a torrent of food industry exposés, the push for locally-produced food has taken off in cities nationwide. But in many cases it has run straight into a regulatory wall. Most zoning codes, like Berkeley’s, are written to maintain separation between commercial and residential areas, and almost none address food production. Add the challenges of potentially contaminated soil, limited water, and neighbors unhappy about the smell of compost, and any project more ambitious than a hobby garden can seem daunting. Still, the small scale of what Hahn is proposing makes it possible to resolve these issues. None of her neighbors has ever complained about the farm, she says, and if anyone did have problem, it would be easy for that person to come talk to her because they’re neighbors. (That said, Hahn notes that changing the code would make it harder for one disgruntled person to sabotage an otherwise popular project.)

Farmers across the country have found individual workarounds. In Flint, Michigan, a collaborative of urban gardeners is working with the city to rewrite outdated codes with an eye towards local food production. In Detroit, which has a large percentage of vacant land within city limits, high– and low-tech urban agriculture is one solution to the search for a new industry. Entrepreneurs and do-it-yourself homeowners are flocking to the city, and a number of proposals to rezone certain neighborhoods and authorize farm projects are currently before the city government. (The nonprofit Detroit Agriculture Network says 900 farms already exist within city limits; meanwhile, an entrepreneur and money manager named John Hantz is offering to put up $30 million to convert large plots of city land to a conventional farm.) In Buffalo, New York, a couple last year reached an agreement with the city to lease 27 acres of vacant land for farming, provided they sell the food locally, and with the understanding that the city may still develop the space in the future. And in Sacramento, the city government amended its codes in 2007 to allow front-yard vegetable gardens, which it had previously forbidden as unsightly.

With the possible exception of Detroit, these are piecemeal solutions to what many people believe is a much bigger problem. Cities might be able to produce enough food to feed their residents, but to do it they need to rethink the way they use space, and that includes changing zoning laws to allow for small-scale businesses like Hahn’s. Berkeley has written goals for local food production into its long-term Climate Action Plan, including commitments to “encourage… buildings to incorporate rooftop gardens that can be used for food production,” “encourage residents to grow food in home and community gardens,” and “support local efforts to provide training to residents in farming and gardening techniques.” Right now, though, they’re just goals.

For now, Hahn and Rosenthal are giving their produce away to neighbors, but as the farm heads into its first full season, they’re again looking at ways to change the law. Though the concerns someone might have about a farm—“yucky smells and loud noises,” says Rosenthal—seem not to apply to Hahn’s farm, both she and Rosenthal say that zoning changes must take neighbor’s comfort levels into account. Still, they say, those changes can be consistent with levels of nuisance and noise that people already take for granted. “People are allowed to have dogs, and dogs are noisy,” says Rosenthal. “Construction workers and landscape workers can start making noise at 7 am.”

“I think it will take time for people to change their way of thinking about this,” says Berkeley City Councilmember Jesse Arreguín, who has spoken with Hahn about drafting legislation that would change the city’s code to encourage small-scale farms like the one she proposes. “We’re trying to achieve more sustainability,” he says, “but it takes a while for our law to change to catch up.”

Why go to all this trouble in the first place? Hahn lives in a foodie Mecca, replete with farmers’ markets and local produce at every grocery store. But for Hahn, even local food isn’t local enough. For example, she points out, “local” food often comes from the Central Valley. “If I can grow it in my own backyard, why would I get it from Salinas?” she asks. She wants to do everything she can, she says, to reduce her “food-miles”—the distance food travels from farm to plate—to zero.

The idea of food that’s “more local than local” has a certain appeal for some, though they can’t always put their fingers on exactly what that appeal is. “When I get the veggies, they have just been picked,” says Austene Hall, who lives down the hill from Hahn and has been getting vegetables from her for a number of months. After a pause, she adds, “I really like having it right next door. Willow and I chat over the wall; I hear all about what they’re planting and why.”

Hall also likes that she can eat vegetables that may as well have been grown in her own backyard, without actually having to grow them. Though she’s vegetarian and describes herself as an avid gardener, she prefers flowers to food and has no interest in trying to meet her own vegetable needs. To Hahn, that’s the reason the model she’s proposing is so crucial. Growing food requires time, resources, and skills that most urban dwellers don’t have and aren’t willing to acquire. “If you want to reduce the total amount of food trucked and shipped, you need a model where a paid professionalis doing it,” she says.

Rosenthal agrees. “We don’t think everyone should sew their own clothes. Why should everyone grow their own food? It doesn’t make sense,” she says. “There’s a huge number of people interested in using their yards to produce food for their families, but because of life circumstances they will never put time into actually growing it. They are in an economic bracket where they want to hire someone to do that for them, just as they would hire a landscaper to maintain their nonedible landscape. If we ignore these people, we ignore a vast productive capacity within the community.”

Despite the challenges, says Rosenthal, people’s growing interest in the origins and sustainability of their food means that the time is right for cities to take on these issues. “People are starting to ask, ‘How do we want to use our collective resources?’” she says. “I have complete faith that these things will change.”

Tuesday, May 18, 2010

How to Raise Money But Not Break the Bank State and federal laws restrict your ability to secure capital. But with imagination, there are ways to do it without spending all your money on experts.from East Bay ExpressBy Jenny Kassan

So you're trying to raise money for your business. But banks aren't lending, your savings are inadequate, and borrowing against the credit card isn't optimal. So you decide to raise money from your customers and put a sign in your window inviting people to invest in your business. Congratulations — you have just violated securities law and could face severe penalties.

Raising money from investors can be a great way to create or expand a business. Unlike lenders, investors typically forgo regular payments of interest and principal in exchange for the possibility of a bigger return down the road. But there is a huge barrier to raising capital from investors: securities law.

The regulations governing securities are little understood by most business owners. In my practice, I have seen small business owners who have no idea that their efforts to raise capital violate state and federal securities law.

It's helpful to recall why securities laws were passed. One big cause of the 1929 stock-market crash was the lack of regulation of securities markets. Any charlatan could print stock certificates promising huge returns to investors who had little recourse when the certificates turned out to be worthless. In response, Congress passed the Securities Act of 1933. This act, along with state securities laws, is designed to protect unsophisticated investors from losing their life savings in speculative investments.

The basic requirement is that a security cannot be sold unless it is registered with the Securities and Exchange Commission and regulators in any state where investors reside. Registration requires extensive disclosures and compliance with numerous technical rules. This is what is commonly known as going public, a process that can easily cost hundreds of thousands of dollars in legal, accounting, and other fees and costs. There are some exceptions to the requirement, but even those can involve complicated compliance work and thousands of dollars in legal fees and other costs.

Many people assume that these requirements apply only when selling stock, but this is not the case. A security is any instrument such as a stock, bond, note, or contract that is purchased by someone who is expecting to receive profits generated by the efforts of others. Even if someone lends you money for your business and you promise an interest payment, that transaction can be covered by securities regulations. In fact, the rules apply not just to the sale but to the offering of a security, so even putting up a sign advertising a chance to invest in your business violates the law.

This is very frustrating, not only for business owners but also for people who would love to invest in their local economy. Because of these laws, even if I wanted to invest in a wonderful and hugely profitable business next door, I couldn't do it unless the business spent thousands of dollars for legal compliance. Unless I am a so-called "accredited investor," with a net worth of at least $1 million or a personal income exceeding $200,000, my only option is to invest in companies that have gone public. These companies are primarily giant multinational corporations whose practices I might not support and which contribute very little to my community.

So what is a small business owner to do? Here are some ways to raise funds that do not require extensive securities-compliance work.

Form a cooperative. In California, there is an exemption from securities regulations for investments of up to $300 by members of a cooperative. Cooperatives are businesses formed under a cooperative statute in which the members each have one vote. The members can be employees, customers, or business owners who join together to market their products or services. As long as the cooperative and all of its members are based in California, and the co-op transacts most of its business in California, it also is exempt from federal securities law.

Get donations. A security creates an expectation that the investor will receive a return. If someone gives you money with no expectation of a return, that is not a security and isn't subject to securities regulations. Many entrepreneurs are using so-called crowdfunding web sites such as ChipIn.com and MicroPledge.com to raise money for various causes. Donations of this type are not tax deductible, but lots of people might be willing to chip in to support a great local business.

Sell memberships. If someone gives you money in exchange for something of value, that is not considered a security. An interesting example of this strategy can be found at BeerBankroll.com. This crowdfunding platform is selling $50 memberships to open a brewpub. Membership confers a T-shirt, a chance to win prizes, and the opportunity to participate in a community-managed brewpub. If you can provide a membership package that people are willing to pay for, this can be a great way to raise money without selling securities.

Pre-sell a product. Awaken Café, the much-loved Oakland coffee shop, sold Café Creator cards. Oakland residents purchased cards that entitled them to cafe products valued at more than the purchase price of the card. For example, a $1,000 card entitled the holder to $1,200 worth of purchases once the cafe opened. Like the membership option, this is the purchase of something of value and therefore not a security.

As entrepreneurs know, creativity can go a long way to make a business thrive. This is as true in the legal realm as in any other.

While there is plenty of talk about the economic recovery, there is barely a whisper about what is just a few weeks ahead. It's not any one thing. It's a combination of three (and possibly four) different events that will deliver devastating body-blows to the economy. They are all being talked about, but no one that I've seen has put them all together.That's where I come in, the doom-and-gloomer, with the news that no one wants to think about, but you are better off knowing now rather than later.

Losing the lifeline

It's been well-reported that unemployment benefits can last for 99 weeks (aka the 99'ers). What has been almost completely lacking in the news coverage is that June 2nd is the drop-dead date for unemployment extensions.

On April 12, 2010, Senator Sherrod Brown of Ohio attempted the impossible and "urged an extension on unemployment insurance". At that time, Senator Brown also stated, "Many of my colleagues had no problem giving tax breaks to companies that shipped jobs overseas, but now balk at extending unemployment insurance."

Currently there are four "Tiers" of extended unemployment insurance. If you were laid off early in the recession then you were eligible for the full 99 weeks. But let's say you were laid off in the spring of 2009 and you are on Tier Three of the emergency extended benefits that runs out in July. If you are in that boat then you are sh*t out of luck. The only way you are eligible for Tier Four is if your benefits expire before the end of May.

This applies to all tiers. Thus if you were laid off only, say, 24 weeks ago, you aren't eligible for any federal unemployment benefits when the state UI expires after 26 weeks. Not even Tier One. Currently the average duration on unemployment is 8 months. That's going to effect around 7 million people.

This means that literally millions of long-term unemployed are going to be losing their last lifeline in the coming months.

More than 400,000 jobless workers could run down their federal benefits each month over the next several months, even assuming that Congress continues to renew the expanded benefit period now in place.

There are some proposals for moving the deadline out for a few months, but nothing concrete at this time with only a week to go before the clock strikes midnight. As for those who have actually used up the full 99 weeks of UI, there is almost no hope of a Tier Five being created.

The limits of stimulation

From the start of the year until about now, the Census will hire 1.2 million Americans. That's a lot of people getting jobs at the absolute best time. Unemployment is currently higher during a census period than at any time since 1940. The problem is that it was never meant to be anything other than a temporary boost for employment, and that boost is coming to an end.

Since 1990 the largest month-over-month growth in Census workers was the 348,000 hired in May 2000 (225,000 were shed the following month).

The May unemployment numbers will probably look pretty good because of the Census, but starting in June those same people are going to be laid off by the hundreds of thousands every month.

Meanwhile, Obama's stimulus bill is over half spent and is scheduled to be drawn down by the end of September.

One of those stimulus items, the homebuyer tax credit, has recently expired. Early effects indicate the slight bounce in housing over the past year is over. Also the FHA is tightening up on closing cost assistance, and poor mortgage lenders.

States of Crisis

It's hard to miss all the talk of broke states, California in particular, almost all of whom will need to craft a new austerity budget in the next couple months. The current proposed California budget completely eliminates welfare, not just cutting it. That should give pause to those hundreds of thousands of people about to lose their UI. To make matters worse, even after those draconian cuts, Schwarzenegger's proposed budget is still $7 billion short of balancing the budget, and lawmakers are in no mood to compromise. Thus we can expect to see another political standoff.

"California no longer has low-hanging fruit. In fact, we no longer have any medium-hanging fruit, nor any high-hanging fruit," Schwarzenegger said.

California is far from alone. The Arizona governor is warning of a "collapse" of the government. New York is running out of money. Illinois is handing out IOU's and says there are no good solutions. Elimination of services are not the only things worth noting.

states will approach their June fiscal year-ends and, as a result of staggering budget gaps, soon announce austerity measures that by my estimates will cost between one million to two million jobs for state and local government workers over the next 12 months... States will raise taxes, but higher taxes alone will not be enough to make up for the vast shortfall in state budgets. Accordingly, 42 states and the District of Columbia have already articulated plans to cut government jobs.

As many as 300,000 of the layoffs are expected to be school teachers. On top of no federal unemployment extensions, we are looking at a million census workers being laid off, plus another million or two state workers, and this all happens in the next couple months.

Will the private sector be able to absorb this labor surplus? Not likely. Small business, the main drivers of the economy, have had their credit cut by Wall Street banks.

Small businesses continue to struggle to gain access to credit and cannot hire in this environment... Small businesses fund themselves exactly the way consumers do, with credit cards and home equity lines. Over the past two years, more than $1.5 trillion in credit-card lines have been cut, and those cuts are increasing by the day. Due to dramatic declines in home values, home-equity lines as a funding option are effectively off the table.

The solution to this calamity is all too obvious.

The Ouzo Effect

The Greek Debt Crisis is causing havoc all over Europe. Bank lending is drying up and the currency is in freefall. In response, the governments of Europe are dramatically cutting back their spending.

How much of this will spill across the sea to America is uncertain, but you can't ignore the fact that Europe's economy is larger than America's. The shockwaves are already effecting China, where their stock market has dropped more than 20% and home sales dropping off a cliff. If this crisis isn't contained very soon, it is likely that it will have a significant and negative impact on the American economy.

Saturday, May 15, 2010

MILWAUKIE,Ore. — Scores of employees gathered to help Bob Moore celebrate his81st birthday this week at the company that bears his name, Bob's RedMill Natural Foods.

Moore, whose mutual love of healthful eating and old-worldtechnologies spawned an internationally distributed line of products,responded with a gift of his own — the whole company. The EmployeeStock Ownership Plan that Moore unveiled means that his 209 employeesnow own the place and its 400 offerings of stone-ground flours, cerealsand bread mixes.

"This is Bob taking care of us," said Lori Sobelson, who helps runthe business' retail operation. "He expects a lot out of us, but reallygives us the world in return."

Moore declined to say how much he thinks the company is worth. In2004, however, one business publication estimated that year's revenueat more than $24 million. A company news release issued this weekstated that Bob's Red Mill has chalked up an annual growth rate ofbetween 20 percent and 30 percent every year since.

"In some ways I had a choice," Moore said of what he could have donewith the company he founded with his wife, Charlee, in 1978. "But in myheart, I didn't. These people are far too good at their jobs for me tojust sell it."

It's not that the offers aren't there. Hardly a day goes by thatNancy Garner, Moore's executive assistant, doesn't field a call orletter from someone wanting to buy the privately held company or takeit public.

"I had four messages waiting when I returned from a recentvacation," she said. "Three of them were buyout offers." Garner saidshe and other employees are floored by Moore's plan, under which anyworker with at least three years tenure is now fully vested.

"We're still learning all of the details," Garner said, "but it'svery humbling to be part of a company that cares this much about itsemployees."

An employee stock-ownership plan, or ESOP, is a retirement plan inwhich the company contributes its stock to the plan to be held in trustfor the benefit of its employees. The stock is never bought or helddirectly.

Vested employees are sent annual reports detailing their respectivestakes in the company. When those employees quit or retire, theyreceive in cash whatever amount they — and the company, throughincreased revenues, new sales and controlled costs — are due.

"Eventual payouts could be substantial," said John Wagner, thecompany's chief financial officer and, along with Moore, one of fourpartners.

Moore said he began thinking about succession about nine years ago.He'd heard about employee-stock-option programs and got much moreserious about the idea three years ago.

That Moore has now pulled off what few other company owners wouldeven dream about comes as no surprise to longtime acquaintances, suchas Glenn Dahl, owner of NatureBake bakery in Milwaukie.

"Bob's a force of nature," said Dahl, whose family's Gresham-areabakery was Moore's first wholesale customer in the 1970s. "He's alwaysbeen that way. He gets an idea and just makes sure it happens, one wayor the other."

Moore's own background is in electrical and mechanical engineering,but he fell in love with the mechanics of stone grinding in the 1960safter reading about old stone-grinding flour mills.

At about the same time, Charlee began sharing with him her delvingsinto the nutritional benefits of eating whole-grain foods. The coupleput their passions to work by starting, with their three sons, theirfirst milling operation in Redding, Calif.

In 1978, the couple moved to Portland to retire. Moore's idea at thetime, reflecting his long-held sense of spirituality, was to learn theBible in its original languages. A chance walk past a closed mill sitenear Oregon City changed everything.

"I call it my emotional epiphany," Moore said. "Whatever excuse I care to give, I was just sucked into it like a vortex."

A 1988 arson destroyed the mill, when Moore was 60. Undeterred, herebuilt the operation, moved once because of space needs and nowoccupies a 15-acre production facility and a two-acre headquarters andretail outlet along Oregon 224 in Milwaukie.

Three production shifts, running six days a week, turn out a line ofgoods distributed throughout North America, Asia and the Middle East.

The company earned an extra splash of international recognition whena team traveled to Scotland and, apparently feeling its oats, won theworld's porridge-making championship.

Employees are just now grasping the meaning of Moore's birthday gift.

"It just shows how much faith and trust Bob has in us," said BoThomas, the company's maintenance superintendent, who has put his fourchildren through college during his two decades there. "For all of us,it's more than just a job. Obviously, it's the same way for Bob, too."

For Moore, meanwhile, nothing about the new arrangement will changea thing. He plans to do for the foreseeable future what he has doneevery day for decades.

"I may have given them the company," he said, chuckling, "but the boss part is still mine."

(This just a first rough draft of what a local food currency could look like)

Purpose: To support sustainable local food production, distribution, and awareness. To make healthy food more accessible, especially to low income populations. To begin the implementation of a Bay Area wide currency system.Governance: Representatives from different nonprofit and for profit entities that are part of the currency system, as well as representatives from the communities using the currency. Positions would have term limits.Mechanism: Paper scrip, mutual credit online accounts, eventually card. Will likely expand to other kinds of local businesses after initial implementation is successful.Backing: Redemption for local food. Labor on local food projects, related businesses and nonprofits. There would be either be no conversion back to dollars or a penalty for conversion (prefer the former). The money sitting in the bank would be available for loans or grants to urban agriculture projects (urban CSAs, community gardens, rooftop gardens, urban farms, school gardens, coop grocery store start ups, farmers market start ups) in combination with food currency loans/grants, thereby converting value from $USD to real value in community – sustainable food security.Issuance: Purchase at a "buy local" discount or as change at certain businesses or nonprofits that are local and involved with food and ag - gardening classes and stores, restaurants, farmers markets, for CSA shares, underground farmers market, grocery stores and small producers. Offer memberships where you get even more of a discount on the scrip as a perk for the membership fee. Earn the scrip through working at approved local food related projects like Hayes Valley Farm or a food bank. This creates opportunities for more abundance of food flowing to those that need it most - those that don't have $USD. Workers at a local business that produces/distributes local food (farm, farmers markets, restaurants, grocers, CSAs) can earn scrip as a bonus. People could also earn scrip by gleaning or by growing food in an open lot or other location, such as backyard, and turning the produce in for distribution in exchange for scrip. Grants and loans may be made to sustainable food security projects. The Timebank could form a parallel online accounting system for this project where timebank members could choose that their volunteer hours go to a food currency account (which would be taxable) and then could draw down on positive accounts to issue scrip. Or if we have scrip denominated in dollars, we could form a separate mutual credit accounting system. Circulation: People/entities would earn or buy or receive as change the currency and then spend at businesses, nonprofits, markets and independent producers related to sustainable, local food. We would encourage member organizations to encourage their suppliers to join the system and integrate the supply chain, thereby creating a currency loop that keeps the money flowing. Loans made in food currency would need to be paid back in food currency thereby creating pressure for borrowers to find ways to both spend and earn back their currency. Businesses that have log jams of currency would be helped to find ways to spend to support their business, to make nonprofit donations of currencies (community grants) for which they would receive public acknowledgment, or to provide bonuses to their employees.Participants: Unemployed, underemployed, elderly, differently-abled, youth, anyone! Food-related nonprofits, grocery stores and restaurants that source some sustainable local food, farmers markets, underground markets, urban farms, educational institutions that teach about food/agriculture, food banks, municipal food projects. Likely partners: Noe Valley Farmers Market, Underground Farmers Market, Rainbow Grocery, Far West Fungi, Hayes Valley Farm, Alemany Farm, Free Farm/Produce to the People, Little City Urban Gardens CSA, Heart of the City Farmers Market, Mission Pie, Forage SF, Café Gratitude/Gracias Madre, Garden for the Environment, Urban Permaculture Institute, Valencia Whole Foods, Veritable Vegetable, Arizmendi, Alemany Farmers Market, San Francisco Food Bank, St. Vincent De Paul and lots more.Funding: Sales of scrip for $USD, grants related to local urban agriculture, food security and local economics.

The people worst-affected by climate change—the developing world's poor—are also the ones who did the least to cause it. The image above is part of a collection from artists around the world who have painted canvases illustrating the human impact of climate change in their countries.

As the climate changes, the consequences for poor people in low-income countries—those who have had no part in the profligate consumption that created the problem—will be particularly devastating. This fact is bringing climate justice to the fore of the agenda for many progressive groups that deal with international issues. But even among those groups, all proposals for dealing equitably with the climate crisis are not equal. The differences between them highlight an important contrast between Old Economy and New Economy perspectives.

That difference is highlighted by blogs on the issue by two progressive friends and colleagues I greatly admire. A blog by Naomi Klein titled "Climate Rage" spells out the Old Economy’s “climate debt” take on climate justice. A blog by Gustavo Esteva with Juliette Beck, titled "Let's See Ourselves," presents a New Economy take that focuses on localization. The contrast between the perspectives brings to mind the wisdom of Albert Einstein, who observed that a problem cannot be solved within the same conceptual frame that created it.

The underlying values and intention of the two perspectives are much the same: Both recognize the seriousness of climate change and the need for decisive action to address the unjust burden that it imposes on the poor. The solutions they put forward, however, are strikingly different. I urge you to read both articles with the following observations in mind.

The climate debt approach calculates the economic cost, for poor people in poor countries, of the climate disruptions caused by profligate consumption in rich countries and demands compensating financial payment. The moral case is clear and unassailable, but by framing both the problem and the solution in financial terms, it embraces an Old Economy frame in which money is the defining value, power is conceded to those who control money's creation and allocation, and the remediation of environmental damage is simply a financial issue.

The foreign aid system within which I worked for some 30 years used the same Old Economy frame. In the name of helping the poor, that system consistently fed corruption as it transferred money from the poor of rich countries to the rich of poor countries. That money often supported aid projects that in fact transferred control of land and water resources to the relatively more wealthy—resources from which the poor traditionally derived their livelihoods. Rather than helping to balance the scales, this process accelerated the social and environmental destruction at the heart of current concerns about climate justice.

House destroyed by a hurricaneClimate Action What will it take to avert disastrous climate change?

Well intentioned though the climate debt solution may be, there is no reason to believe that a program of financial reparations from the global North to the global South will play out differently than the past 60-plus years of foreign aid. In itself, it will do nothing to redistribute wealth from rich to poor or to change the institutions and behaviors responsible for the climate crisis.

In contrast, by focusing on the local control and sustainable beneficial use of Earth's real resources, the localization perspective embraces the New Economy frame. It recognizes life, rather than money, as the defining value. It recognizes that the locus of power and leadership initiative must reside with local people engaged in stewarding Earth's resources to ensure sustainable livelihoods for themselves and their children for generations to come. They know the devastating consequences of the Old Economy from their everyday experience. They have the needed moral authority, the political power of numbers, and the necessary local knowledge.

As Wall Street has so dramatically demonstrated, the world of money is a world of illusions, accounting tricks, and scams by which the rich expand their control of Earth's declining base of real living wealth without the burden of producing anything of value in return. We must turn our attention to defining problems and solutions in terms of the goal of restoring and equitably stewarding Earth's real living wealth.

The foremost obligation of those of us who have been the beneficiaries of the rapacious excesses of the Old Economy is to change the way we live to dramatically reduce our burden on Earth's biosphere and bring an end to our expropriation of the resources of others. Restructuring and democratizing the institutions of money will be a necessary part of this process. It requires a great deal more than the climate debt solution of a money transfer. It requires changing our values, our institutions, and the way we live.

David Korten author picDavid Korten is co-founder and board chair of YES! Magazine, co-chair of the New Economy Working Group, president of the People-Centered Development Forum, and a founding board member of the Business Alliance for Local Living Economies(BALLE). His books include Agenda for a New Economy: From Phantom Wealth to Real Wealth, The Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World.

Wednesday, May 12, 2010

This article is a adapted from the introduction to the upcoming book Sacred Economics. The purpose of the book is to make money and human economy as sacred as everything else in the universe.

Today we associate money with the profane, and for good reason. If anything is sacred in this world, it is surely not money. Money seems to be the enemy of all our better instincts, as is clear every time the thought "I can't afford to" blocks an impulse toward kindness or generosity. Money seems to be the enemy of beauty, as the disparaging term "a sellout" demonstrates. Money seems to be the enemy of every worthy social and political reform, as corporate power steers legislation toward the aggrandizement of its own profits. Money seems to be destroying the earth, as we pillage the oceans, the forests, the soil, and every species to feed a greed that knows no end.

From at least the time that Jesus threw the moneychangers from the temple, we have sensed that there is something unholy about money. When a politician seeks money instead of the public good, we call him corrupt. Adjectives like "dirty" and "filthy" naturally describe money. Monks are supposed to have little to do with it: "You cannot serve God and Mammon."

At the same time, no one can deny that money has a mysterious, magical quality as well, the power to alter human behavior and coordinate human activity. From ancient times thinkers have marveled at the ability of a mere mark to confer this power upon a disk of metal or slip of paper. Unfortunately, looking at the world around us, it is hard to avoid concluding that the magic of money is an evil magic.

Obviously, if we are to make money into something sacred, nothing less than a wholesale revolution in money will suffice, a transformation of its essential nature. It is not merely our attitudes about money that must change, as some self-help gurus and "prosperity programming" teachers would have us believe; rather, we will create a new kind of money that embodies and reinforces our changed attitudes. Sacred Economics describes this new money and the new economy that will coalesce around it. It also explores the metamorphosis in human identity that is both a cause and a result of the transformation of money. The changed attitudes of which I speak go all the way to the core of what it is to be human: they include our understanding of the purpose of life, humanity's role on the planet, the relationship of the individual to the human and natural community; even what it is to be an individual, a self. This should not be surprising, since we experience money (and property) as an extension of our selves; hence the possessive pronoun "mine" to describe it, the same pronoun we use to identify our arms and heads. My money, my car, my hand, my liver. Consider as well the sense of violation we feel when we are robbed or "ripped off," as if part of our very selves had been taken.

A transformation from profanity to sacredness in money, something so deep a part of our identity, something so central to the workings of the world, would have profound effects indeed. But what does it mean for money, or anything else for that matter, to be sacred? It is in a crucial sense the opposite of what sacred has come to mean. For several thousand years, increasingly, the concepts of sacred, holy, and divine have referred to something separate from nature, the world, and the flesh. Three or four thousand years ago the gods began a migration from the lakes, forests, rivers, and mountains into the sky, becoming the imperial overlords of nature rather than its essence. As divinity separated from nature, so also it became unholy to involve oneself too deeply in the affairs of the world. The human being changed from a living soul to a mere receptacle of spirit, a profane envelope for a sacred soul, culminating in the Cartesian mote of consciousness observing the world but not participating in it, and the Newtonian watchmaker God doing the same. To be divine was to be supernatural, non-material. If God participated in the world at all, it was through miracles -- divine intercessions violating or superseding nature's laws.

Yet, paradoxically, this separate, abstract thing called spirit is supposed to be what animates the world. Ask the religious person what has changed when a person dies, and she will say the soul has left the body. Ask her who makes the rain fall and the wind blow, and she will say it is God. To be sure, Galileo and Newton appeared to have removed God from these everyday workings of the world, explaining it instead as the clockwork of a vast machine of impersonal force and mass, but even they still needed the Clockmaker to wind it up in the beginning, to imbue the universe with the potential energy that has run it ever since. This conception is still with us today as the Big Bang, a primordial event that is the source of the "negative entropy" that allows movement and life. In any case, our culture's notion of spirit is that of something separate and non-worldly, that yet can miraculously intervene in material affairs, and that even animates and directs them in some mysterious way.

It is hugely ironic and hugely significant that the one thing on the planet most closely resembling the forgoing conception of the divine is money! It is an invisible, immortal force that surrounds and steers all things, omnipotent and limitless, an "invisible hand" that, it is said, makes the world go 'round. Yet, money today is an abstraction, at most symbols on a piece of paper, but usually mere bits in a computer. It exists in a realm far removed from materiality. In that realm, it is exempt from nature's most important laws, for it does not decay and return to the soil as all other things do, but is rather preserved, changeless, in its vaults and computer files, even growing with time thanks to interest. It bears the properties of eternal preservation and everlasting increase, both of which are profoundly unnatural. The natural substance that comes closest to these properties is gold, which does not rust, tarnish, or decay. Early on, gold was therefore used both as money and as a metaphor for the divine soul, that which is incorruptible and changeless.

Money's divine property of abstraction, of disconnection from the real world of things, reached its extreme in the early years of the 21st century as the financial economy lost its mooring in the real economy and took on a life of its own. The vast fortunes of Wall Street were unconnected to any material production, seeming to exist in a separate realm.

Looking down from Olympian heights, the financiers called themselves "masters of the universe," channeling the power of the god they served to bring fortune or ruin upon the masses, to literally move mountains, raze forests, change the course of rivers, cause the rise and fall of nations. But money soon proved to be a capricious god. As I write these words, it seems that the increasingly frantic rituals that the financial priesthood uses to placate the god money are in vain. Like the clergy of a dying religion, they exhort their followers to greater sacrifices while blaming their misfortunes either on sin (greedy bankers, irresponsible consumers) or on the mysterious whims of God (the financial markets). Soon, perhaps, we will blame the priests themselves.

What we call deflation, an earlier culture might have called, "God abandoning the world." Money is disappearing, and with it a third property of spirit, the animating force of the human realm. At this writing, all over the world machines stand idle. Factories have ground to a halt, construction equipment sits derelict in the yard. Yet all the human and material inputs to operate them still exist. There is still fuel, there are still raw materials, and there are still human beings in abundance who know how to operate the machines. It is rather something immaterial, that animating spirit, which has fled. What has fled is money. That is the only thing missing, so insubstantial (in the form of electrons in computers) that it can hardly be said to exist at all, yet so powerful that without it, human productivity grinds to a halt. It is as if God had forsaken the world. Even beyond the mechanical realm, we can see the demotivating effects of lack of money. Consider the stereotype of the unemployed man, nearly broke, slouched in front of the TV in his undershirt, drinking a beer, hardly able to rise from his chair. Money, it seems, animates people as well as machines. Without it we are dispirited.

We do not realize that our concept of the divine has attracted to it a god that fits that concept, and given it sovereignty over the earth. By divorcing the soul from the flesh, spirit from matter, and God from nature, we have installed a ruling power that is soulless, alienating, ungodly and unnatural. So when I speak of making money sacred, I am not invoking a supernatural agency to infuse sacredness into the inert, mundane objects of nature. I am rather reaching back to an earlier time, a time before the divorce of matter and spirit, when sacredness was endemic to all things.

My understanding of sacredness is secondary to my feeling of sacredness, or to put it better, to the feeling of being in the presence of the sacred. I cannot define that feeling, nor need I define it, because I am sure that you have felt it as well. In the presence of the sacred, we are moved to the very core of our being, we feel reverence and awe, humility and amazement, and a profound sense of gratitude. Even though, intellectually, I know that I am in the presence of the sacred all the time, only rarely do I actually feel its fullness. When I do, I feel like I have returned to a home that was always there and to a truth that has always existed. It can happen when I observe an insect or a plant, hear a symphony of birdsongs or frog calls, feel mud between my toes, gaze upon an object beautifully made, apprehend the impossibly coordinated complexity of a cell or an ecosystem, witness a synchronicity or symbol in my life, watch happy children at play, am touched by a work of genius. Extraordinary though these experiences are, they are in no sense separate from the rest of life. Indeed, their power comes from the glimpse they give of a realer world, a sacred world that underlies and interpenetrates our own.

What is this "home that was always there, this truth that has always existed"? It is the truth of the unity or the connectedness of all things, and the feeling is that of participating in something far greater than oneself, yet which also is oneself. In ecology, this is the principle of interdependence: that all beings depend for their survival on the web of other beings that surrounds them, ultimately extending out to encompass the entire planet. The extinction of any species diminishes our own wholeness, our own health, our own selves: something of our very being is lost. We can feel this sense of loss directly, as an emotion, as well as indirectly through the multiplying health crises of our time. This book will draw from ecology to help describe a sacred economy. For example, in the planetary ecosystem there is no such thing as waste: the waste of one creature is the food of another, creating a sacred gift circle. For an economy to be sacred, it must be the same.

If the sacred is the gateway to the underlying unity of all things, it is equally a gateway to the uniqueness and specialness of each thing. A sacred object is one-of-a-kind; it carries a unique essence that cannot be reduced to a set of generic qualities. That is why reductionistic science seems to rob the world of its sacredness, since everything becomes one or another combination of a handful of generic building blocks. This conception mirrors our economic system, itself consisting mainly of standardized, generic commodities, job descriptions, processes, data, inputs and outputs and, most generic of all, money, the ultimate abstraction. In earlier times it was not so. Tribal peoples saw each being not primarily as a member of a category, but as a unique enspirited individual. Even rocks, clouds, and apparently identical drops of water were thought to be sentient, unique beings. The products of the human hand were unique as well, bearing through their distinguishing irregularities the signature of the maker. Here was the link between the two qualities of the sacred, connectedness and uniqueness: in their uniqueness, objects retain the mark of their origin, their place in the great matrix of being, their dependency on the rest of creation for their existence.

In this book I will describe a vision of a money system and an economy that is sacred. In other words, I will describe an economy that is no longer separate, in fact or in perception, from the natural matrix that underlies it. I will describe a reunion of the long-sundered realms of human and nature. The human economy will no longer be something separate from nature; it will be an extension of nature that obeys all of its laws and bears all of its beauty, wholeness, and enchantment.

Within every institution of our civilization, no matter how ugly or corrupt, there is the germ of something beautiful: the same note at a higher octave. Money is no exception: its original purpose is simply to connect human gifts with human needs, so that we might all live in greater abundance. How instead money has come to generate scarcity rather than abundance, competition rather than sharing, is one of the threads of this book. Yet despite what it has become, in that original beauty of money we can catch a glimpse of what will one day make it sacred again. We intuitively recognize the exchange of gifts as a sacred occasion, which is why we instinctively make a ceremony out of gift-giving. Sacred money, then, will be a medium of gifting, a means to recreate the gift economy of a hunter-gatherer or village society on a planetary level. A sacred economy will be an economy of the Gift.

Sacred Economics describes this future and also maps out a practical way to get there. Long ago I grew tired of reading books that criticized some aspect of our society without offering a positive alternative. Then, I grew tired of books that offered a positive alternative that seemed impossible to reach: "We must reduce carbon emissions by 90%." Then I grew tired of books that offered a plausible means of reaching it, that did not describe what I, personally, could do to create it. Sacred Economics operates on all four levels: it offers a fundamental analysis of what has gone wrong with money; it describes a more beautiful world based on a different kind of money and economy; it explains the collective actions necessary to create that world and the means by which these actions can come about; and it explores the personal dimensions of the world-transformation, the change in identity and being that I call "living in the Gift."

The economic crisis we face today is just one of many crises that are converging upon us all at once: crises in energy, education, health, water, soil, climate, politics, and the environment. My previous book, The Ascent of Humanity, traced the origin of each to a common root, millennia old, that I call Separation. Their convergence is a birth crisis, in which we are expelled from the old world into the new. Unavoidably, these crises invade our personal lives, our world falls apart, and we too are born into a new world, a new identity. This is why so many people sense a spiritual dimension to the planetary crisis.

I dedicate all of my work to the more beautiful world our hearts tell us is possible. I say our "hearts", because our minds tell us it is not possible. Our minds doubt that things will ever be much different than experience has taught us. You may, as you read the forgoing encomium to a sacred economy, have felt a wave of cynicism, contempt, or despair. You might have felt an urge to dismiss my words as hopelessly idealistic. Indeed, I myself was tempted to tone down my description, to make it more plausible, more responsible, more in line with our low expectations for what life and the world can be. But such an attenuation would not have been the truth. I will, using the tools of the mind, speak what is in my heart. In my heart I know that an economy and society this beautiful is possible for us to create, and indeed, that anything less than that is unworthy of us. Are we so broken, that we would aspire to anything less than a sacred world?

Tuesday, May 11, 2010

Posted by Jason Bradford on March 4, 2009 - 7:24pm in The Oil Drum: Campfire

I thought this evening's Campfire post might connect well to Gail's article this morning. If the financial system is at a risk of collapse, and if so many of our basic goods depend on the financial system, then what, if anything can we do to be more resilient to economic shocks? Below the fold is a description of a project I am working on that may provide some answers.

Image 1. Front and back sides of a Mendo Credits slip. Our first printing of Mendo Credits was for 600 notes sold at $10 each. Proceeds from the sale of Mendo Credits allows us to purchase 8000 pounds of grains and dry beans. Mendo Credits are 100% backed by specific quantities of pinto beans, triticale, and white and brown rice.

As a kid did you ever fantasize about Monopoly game money becoming real? I know I did. Perhaps that’s why I left the printer shop the other day with a sense of bemusement. I had just designed and printed $6000 of money called Mendo Credits. I felt confident that people would accept it, and I also proudly considered that Ben Bernanke doesn’t make money as good as this.

Now before you call the Treasury Department to report me, listen to my story. It may sound funny, but the reality of money is deadly serious. This is perfectly legal and I want you to play copy cat.

Rethinking Food Security

Most institutions, such as food aid NGOs or the US Department of Agriculture, express concern about food security in terms of the ability for low income people to purchase adequate food. This is a valid way to think of food security. If food prices are high relative to income, or if other compelling expenses such as housing, health care and transportation also require a large portion of income, then securing adequate food on an individual or family level will be problematic. Programs that disperse food to the needy, redistribute income through tax policies, assist with the high costs of non-food expenses, guarantee a living wage, etc. all address distribution inequity and are laudable.

But the question I want to ask is whether they are now sufficient? Two unspoken assumptions underpinning the framing food security narrowly as an “income problem” require rethinking.

The first assumption is that enough food can actually be grown and delivered to wherever it needs to go. A study of the intersection of supply limits to water, energy and topsoil combined with climate change should dispel the notion that food abundance can simply be taken for granted. Over 90% of transportation relies on oil, and extraction of oil appears to be entering a permanent global decline. The fuel cost spike of 2008 severely hampered food distribution in some parts of the world. Cheap transportation, which permits food to be grown thousands of miles from where it is eaten, stored in centralized facilities, and delivered daily to where we live, shouldn’t be taken for granted either.

The second assumption is that the money we have now will remain a reliable medium of exchange that enables a smooth flow of production and distribution. Few people realize that most money comes into existence through bank credit that is backed by the borrower’s debt and any collateral. Banks don’t actually have money to lend, they simply decide who is “credit worthy,” and for how much. After a borrower signs the loan documents the bank creates the corresponding money in electronic accounts, such as a checking account. Credit and debt are therefore “flip sides of a coin.” People receiving bank credit are in debt to banks, but, correspondingly, banks are in debt to people for all the deposits on hand. When too many loans default, banks are at risk of defaulting on their own promise to maintain the savings of depositors. This is why credit dries up as debts go bad: As debts are cancelled through bankruptcy then a corresponding level of credit must disappear also. In the present banking system it is mathematically impossible for all loans to return their principal plus interest without a constant expansion of debt/credit. But a system that depends upon unending growth eventually ends. The actions of the Federal Reserve to re-inflate the reserves of the banking system are a desperate attempt to fix something that is permanently broken. Unfortunately, the systemic problems are deeper than the surface actions currently being taken by the Federal Reserve, The U.S. Treasury and the U.S. Government. When I think of the global financial system nowadays what comes to mind is the "Humpty Dumpty" rhyme. Knowing that the debt-based money system we currently rely on is failing, we created Mendo Credits to function without debt or interest.

Food-Backed Local Currency

The money I had printed was created with all the above-mentioned issues in mind: wide income disparity, lack of practical self-reliance, unsustainable agriculture, resource depletion, climate change, a fragile just-in-time delivery system, a failing money system, and rising unemployment. When I said that “Ben Bernanke doesn’t make money as good as this” I meant that today’s dominant money actually creates or exacerbates those troubles, whereas Mendo Credits can be part of their solution.

Along with several other people, I am working with Patty Bruder and Cyndee Logan of a local non-profit called North Coast Opportunities (NCO). NCO mainly provides social services, such as running preschools, senior support, and managing community gardens. Mendo Credits is a new food-backed local currency project partly funded by a grant from the California Endowment. The overall goals of the project are to improve community health, economic vitality and environmental sustainability through local food system development. For as long as I have known Patty and Cyndee they have been thinking about the importance of system change and practical self-reliance. They’d prefer to develop a community garden where low income families can grow their own food rather than hand out meal money.

Image 2. The farms package our orders in what are called 1-ton totes, which are large bags moved on wooden pallets. For comparison, an entire hopper car load would be about 12 tons. A local business that does nearly daily trucking to the Sacramento Valley currently transports our food to their warehouse space, where it is also kept pest free using rodent traps. The warehouse tends to stay cool, but we will have to worry about insects during the heat of summer. We have a commercial scale and household storage buckets available. From left to right: Cyndee Logan, Mike Adair and Patty Bruder fill and weigh buckets in preparation for a distribution day.

Historically in the United States and elsewhere, local currencies are known to stabilize local economies when national currencies are troubled, such as bouts of hyper inflation or deflation and joblessness. This works because those accepting local money are also likely to seek out others who accept it too, creating a social dynamic that forms new, local economic associations. As these strengthen, the flow of local money picks up and work can get done even in the face of economic disaster outside the community. Because they can only be spent locally, profits on economic transactions done with a local currency remain in the community and spur more local investment. Local governments, regional business associations, community banks, and worker cooperatives are examples of the kinds of institutions who tend to successfully issue local currency. They have the social capital to be broadly accepted, and the capacity to manage the task of issuing and redeeming money.

Image 3. A great way to spread awareness of the many issues confronting us is by spending Mendo Credits into circulation. The acceptance of money is largely a social phenomenon, and it is too early to say how well Mendo Credits will be recognized as a local currency. On the several occasions where I have tried to so far, I have had no trouble paying individuals using Mendo Credits. For example, the printer of Mendo Credits asked for payment in Mendo Credits. In the example pictured above, my friend Michael Foley opens his wallet to redeem Mendo Credits for food. He is handing over the same bills I paid him for custom tractor work four weeks earlier. Pending sales of rice and beans to a local burrito shop may mean they will begin accepting Mendo Credits for prepared food.

Mendo Credits are backed by a tangible asset. In other words, Mendo Credits are a “reserve currency” as opposed to a “fiat currency” like Federal Reserve dollars. Many people are familiar with money backed by gold, which was once the case with U.S. dollars, but Mendo Credits are backed by reserves of stored food. Our reserve currency has a number of desirable properties at this time in history.

The asset value of Mendo Credits remains stable over a significant time period because we lock in an exchange rate for specific quantities of food for one year from the date of issue. Whereas gold and silver are inedible, Mendo Credits can be redeemed for the sustenance of life. When you hold a Mendo Credit note, you know it represents the quantity of food printed on its face and, if you want or need to, you can actually get that food.

Mendo Credits help with our goal of greater community self-reliance by directing investment towards essential long-term capital. For example, if a small grain silo costs $5000 to build, credits can be issued with prices that reflect both the cost of grain and storage. Eventually, local farmers could be contracted to supply grains and dry beans to our silos. Our land base would then have higher value and be able to support more jobs.

Image 4. People redeem Mendo Credits for food in downtown Willits, such as the Community Center pictured here. As our stores become depleted we can decide to issue a new batch of currency. Profits from previous sales plus income from the new Mendo Credits can form the capital to buy more food and replenish our stocks. We encourage household storage and consumption so that the population has their own food buffer and we can expand our capacities.

Currently we buy grains and beans from farms about 150 miles away, which is as close as we can locate. These farms are organic and family owned. The point is that we can decide to support agricultural best practices and once we establish relationships with farmers and become significant buyers, we can seek improvements when warranted.

Our goal to move product aligns with the needs of households to be financially frugal and eat healthy foods. We are selling organic grains and beans at lower prices than in stores, and are developing informative guides for preparing meals around whole and seasonal foods. Our guides also help families assess how much they eat to decide how many Mendo Credits to buy and whether they want to store significant amounts in their home. Emergency preparedness is enhanced as more families buy in bulk, habitually eat, and restock their food stores.

Image 5. Mendo Food Futures is developing guides for using wholesome, locally grown and potential storage foods in everyday meals and snacks. For example, make your own energy bars with minimally processed grains, toasted nuts, dried fruit and honey. No baking or refrigeration required, and almost universally loved.

Mendo Credits in Practice

When I told my friend Sara about Mendo Credits she beamed with delight, opened her wallet, and showed me an UDIS. A Honduran food and farmer cooperative, COMAL, issues its own local currency called the UDIS for many of the same reasons we started Mendo Credits. It was great to learn that these same ideas had already taken hold elsewhere and have a record of success.

Mendo Credits are just beginning to circulate in the town of Willits, CA and we hope this spreads around our region. Four central downtown businesses are serving as sales outlets for the new currency: The Bank of Willits, Mendonesia Café, The Book Juggler, and Leaves of Grass Bookstore. NCO also sells them at the Willits Farmers’ Market.

A local business is currently assisting with transportation and storage. Their truck picks up from farms in the Sacramento Valley and hauls one ton totes on pallets to their warehouse. We transfer from the totes into 3.5 or 5 gallon buckets and take these to a convenient downtown location for distribution. To make it quick and easy to distribute grains and beans, we only sell in specified increments as given on each Mendo Credits slip. For example, 11 lbs of rice can be redeemed for a single Mendo Credits note. We have several buckets of rice to distribute from, each one containing about 40 lbs of rice. When a customer wants to redeem a note for rice, we can place their container on our commercial scale, zero the readout, and pour out 11 lbs.

Mendo Credits are a 100% reserve currency with each note representing some fixed quantity of food. Therefore, the Mendo Credits brought to us for redemption are moved out of circulation. However, redemption of Mendo Credits signals a potential demand, which allows us to issue new notes. We have to watch our supplies of grains and beans and estimate future demand. At some point before all our current food stores are claimed we will issue more Mendo Credits. A combination of profits from previous sales plus the income from new notes, which may not be sold out yet, can go towards buying more food supplies.

This is a small beginning but we are already looking at what it would entail to expand Mendo Credits significantly. We have cost estimates for building large silos along the railroad tracks, for example, and are actively raising funds for several small silos in the meantime. The investment required is substantial, but compared to what our society typically spends it looks like a bargain. For perspective, the storage capacity to hold enough grains and dry beans to feed the Willits area (about 14,000 people) for one month costs $120,000. A half million dollars would build the silos, fill them with food, and give us the peace of mind of a one month supply of food for the community, and potentially spawn a revitalization of the local food system, including jobs in farming, food processing, waste recapture, and transportation.

Image 7. Willits is geographically rather isolated, and local officials are concerned about food security with respect to transportation failures. No significant food storage exists in the area, with surveys showing less than a week of food in grocery stores. County Sheriff Tom Allman says a major earthquake could easily isolate us for a month. Patty Bruder (left) and Cyndee Logan (right) of Mendo Food Futures discuss the possible placement of grain and bean silos on City of Willits property adjacent to railroad tracks with the City’s Community Development Director Alan Falleri.

Initial enthusiasm suggests that Mendo Credits will begin circulating like cash within town. However, since the supply of Mendo Credits is limited to the supply of grains and beans in storage, they can’t become a dominant means of exchange until our local economy has very large storage facilities and is on its way towards food self-sufficiency. In the meantime, they are a fantastic educational device and may spur investment towards local food security.

References

A good introduction to local currencies can be found online at: http://www.feasta.org/documents/shortcircuit/index.html?sc3/c3.html and Big Gav wrote a nice article about them too: http://anz.theoildrum.com/node/4633

Treating food security as an income issue is evident by questions in this survey: http://www.fns.usda.gov/fsec/FILES/FSGuide.pdf

For further explanations of how our present financial system works see: http://www.chrismartenson.com/ and http://www.moneyasdebt.net/

An article in English about the UDIS can be found here: http://www.new-ag.info/09/01/develop/dev3.php

Sunday, May 9, 2010

Everybody wants more money so they can enjoy life, send kids to college and retire well. To achieve these, over 40% of American households have invested in stocks and bonds.

But Wall Street is risky and even destructive. Bull markets lure the middle class to bet heavily then, often, their money dissolves. $1,000 worth of Nortel stock one year ago now yields $13.00. Enron's $1,000 is now $41; Worldcom lost $995 of the thousand. These tophat crooks can't be controlled: the watchdog workload of the Securities & Exchange Commission grew by 80% between 1991-2000 while staff grew just 20%.

Even when the market's rising, only 3% of trading is essentials like food and fuel. Warmaking, prisons, traffic accidents and environmental depletion are profitable, while neighborhoods and family farms fail.

Where's a safer place to invest? Many now realize that unless the global economy is based on a world of stable communities amid healthy environments, trading stable currencies, then bank accounts are just worthless big numbers. Getting reliably rich means investing in community.

So let the big boys shoot craps with their billions — we can bring our pensions and savings home to rebuild America, starting in Philadelphia. Local wealth will make our city an outstanding place to raise kids and retire, providing steady friends, child care and home care; vacations and fun; good healthy food; water and air; civic beauty; least crime. Investors large and small can systematically create a mutual enterprise system providing us retirement equity transferable to other communities with affiliated programs.

Creating these communities, to ensure our personal security within a safer world, requires new kinds of investment, managed by people we trust and control — fellow Philadelphians whose homes and jobs depend on PRAISE local business development. New programs are beginning which will retain wealth locally, stimlate thousands of creative jobs, meet all basic needs, share power with lower-income residents, repair the environemnt, and distinguish Philadelphia as one of the most beautiful cities in the Americas.

The price tag for these programs, $200 million, is roughly one percent of total annual wages & salaries earned in Philadelphia. It's five percent of the City of Philadelphia's budget. It's Temple University's endowment. It's the wealth Bill Gates has gained on a good day. It's two hours of additional federal debt.

How could we raise this money without relying on the lottery or taxes? The Philadelphia Regional and Independent Stock Exchange (PRAISE) will enable a wide range of private investors to invest safely in Philadelphia to build genuine wealth and security. Everyone, rich and poor, has some type of capital required — skills, tools, time, topsoil, property, cash. PRAISE pools this capital, defines program RFPs, issues bonds and negotiables, selects contractors, provides grants and loans to the businesses described below, monitors program progres, redeems bonds by issuing business notes, defines the transferability of bonds.

Here are the details: What are the guiding principles? How is PRAISE different from a Community Development Corporation? What do investors get? What companies does it invest in? How is the corporation structured? Who manages it? How is community progress measured? How is PRAISE related to government? Conclusion How do we begin? REQUESTS FOR PROPOSALS

What are the guiding principles?

This Mutual Enterprise System retains and expands wealth to provide jobs that clean the environment. It converts capital into harmless and beneficial efforts. It provides basic benefits for all, and special benefits for investors. It transfers technological and economic power to lower-income residents, building relevant skills. Public benefit is personal benefit, whether we're rich or poor.How is PRAISE different from a Community Development Corporation?

* Investments may be made with capital other than dollars * Repays investors and donors * Repays with regional bonds/notes redeemable for services and goods * Pays half of interest in advance * Elects seats on the Exchange by community rather than by purchase or appointment * Businesses are selected which rely on technologies manageable by neighborhoods rather than centralized expertise/machinery, and which reduce pollution * Businesses are selected which transfer economic power to community, rather than agencies which help the poor stay poor * Relies on community-based market indicators set by the Securities and Ecologies Commission (SEC) rather than narrower profit/loss measures * Monetizes tools, skills, crops, soil, volunteer hours, labor hours, development rights transferred (incentive for buyer as well as seller), negawatts, restraint of childbirth, locally-made warranty * Regulates transfers of negotiables/bonds among the PRAISE programs as services available

What do investors get?

Transferable equity in community enterprises that provide secure sources of food, fuel, and housing. Interest earned is community interest, in order to provide investors with immediate return, fun, food, health, housing, keys to city, gratitude, inheritance, retirement security, in the form of negotiables, bonds, services, goods.

Credits issued are valued according to priorities set by PRAISE.

Investors gain ownership that's anchored to region to benefit a community which includes themselves. Stocks in such companies transferable benefits to affiliated companies elsewhere.

They receive community interest in the form of discounts (in advance) and services (including municipal non-utility), standard accrual, authority and honors. Largest investors are repaid not only directly by direct investment, but by the new market's rising from energy efficiency, discretionary spending, and ecotourism. Thus, ultimately, investors get to live well in a good community. They provide a heritage for their children and grandchildren. They serve America and the world. EXAMPLE: Joe buys $500 of four-year PRAISE bonds. He receives an immediate 8% Community Interest ($40) in the form of discount (≥25%) coupons provided by local businesses which themselves receive long-term PRAISE bonds at half the value of the discount given. EXAMPLE: Jessie volunteers 50 hours installing insulation and receives $500 of PRAISE bonds. Interest and principal are repaid as above. EXAMPLE: Ephraim sells a building to PRAISE for $150,000 of PRAISE bonds. EXAMPLE: Elana transfers property development rights valued at $50,000 to PRAISE for a tax deduction plus $10,000 of PRAISE bonds.

As PRAISE businesses develop and issue their own store notes (regulated by PRAISE), these investors may select to redeem some of their PRAISE bonds for store notes, or negawatts, or local currency, at principle + another 8% interest ($40 in Joe's example above), a total of 16% interest ($80 for Joe).

The same applies to those who invest volunteer hours doing work needed by any PRAISE business. Hours of labor are paid with PRAISE bonds redeemable for PRAISE goods and services as available.What companies does it invest in?

Energy conservation is the foundation of economic development. Millions of dollars yearly kept in Philadelphia, not paid to PECO, is money which can be spent here to stimulate new enterprises and jobs that serve our broader aims. Other basics, like food, water, housing, health care and transportation are top priorities.

FUEL

* Insulation: a countrywide overhaul would cut our heating/cooling bills by over 80%, giving us discretionary income to support local businesses and farms, thus creating new jobs and strengthening local culture. The foundation of economic development. * Superwindows are translucent walls with R20 and higher. * Cogeneration uses nearly all of other wasted natural gas and heat. * Retrofit of walls and attics cuts heating/cooling bills by 80%. * Alternative energy co-ops; solar, wind, hydro * Urban woodlots/forests * Depaving

* Alternative healing centers rely on natural strength and remedies to promote wellness, prevent illness, and revive. * Health fund allows us to self-insure, keeping $50 million per year in insurance payments in this county instead of wasting on HMOs. * Medical/dental clinic co-ops provide free care for low-income residents.

Guided by an elected board of directors subject to referenda initiated by investors or community. Management is organized so that community has direct intervention, expertise is rotated rather than entrenched, new expertise develops reflecting ever-changing circumstances, main incentive is services.

* Each shareholder has one vote regardless of investment size * Each community member has one vote * Democratically elected boards * Celebrate citizens' right to referendum, recall and congress (special meetings). Constrains tendency of any organization to become bureaucratized and ingrown, serving staff more than the public. Staff must agree to set examples; to be paid regional credits, live simply, and be compensated by continual revolution * Local woodlots and wetland larger than 440 square feet have total 25% of votes on any proposal to cut or drain them. They vote on no such proposals.

Who manages it?

Each business agrees to the following:

1. Maximum salary double the lowest paid. Maximum pay double the livable wage. Management and staff are motivated by mission, satisfied with right livelihood, paid in-kind and regional credits 2. Employees must reside within the community 3. Local sourcing; RFP for machines, raw materials, design, labor to maximum possible 4. Adaptive re-use of buildings. No new footprint or paving expansion. 5. Redeem PRAISE stock 6. One vote per resident stockholder 7. One vote per resident 8. Board term limits: former voting members invited to remain as elders 9. Subject to shareholder and community right to referendum 10. Businesses can borrow against the general fund and repay it as donated in sequence or sell services 11. Provide public accounting of credits issues 12. Redistribute to PRAISE upon dissolution 13. Links to related programs worldwide

Each business could operate with separate 501(c)3. But under PRAISE umbrella, they:

The SECURITIES AND ECOLOGIES COMMISSION (SEC) defines, valuates, and compiles indicators of local economic health, including such measures as: small farm base, soil depth and rainfall; shopping locally; population stability, birth rate and age distribution; insulation and fireproofing; solar, wind, and hydro power generation; bike and transit usage; employment and crime. Creates a monthly index based on the above.

SEC ventures a specific formula for calculating an indexed increase or decline of sustainable local economy, based on these indicators. Valuations are weighted relative to one another according to long-range communitywide impact. They are constantly adjusted to create a more full and balanced portrait of the local economy. The SEC database plugs in the numbers, calculates values, subtotals and total. Raw data are obtained by regular arrangements with relevant agencies or through FOIA. Some are fixed infrastructure calculations; others change monthly, quarterly, semiannually, annually or decenialy. Best estimates may be sufficient. See Philadelphia's New Economic Indicators

The five members of the SEC are elected to three year terms. Values may be updated by local university classes, and other volunteers.How is PRAISE related to government?

Gradually taking over certain government functions on a nonprofit direct democratic basis; volunteers earning community equity replace taxes collected by force. To the extent government approval has been mandated to establish, fun and regulate, it's essential to have public officials and staff who welcome changes of these types. PRAISE seeks to elect citizens who will provide a supportive interface with the state/federal government.Conclusion

Through PRAISE investment, Philadelphia becomes a fully democratic intentional community where privacy and ownership are secured, while social spaces are plentiful. Most citizens participate as neighbors in mutual aid associations which entitle them to free and low cost health care, fresh local organic food, living in homes which are so well insulated that costs for heating and cooling are mild. Philadelphians are able to get around town on foot, by bike, by trolley, and on buses. Streets are safe and quiet but for children playing. The sidewalks are painted with mosaics, and buildings with murals. Cayuga Lake becomes so clean again that it's full of fish for those who eat them.

Taken together, these will allow us to relax in a beautiful, exciting community, raising the standard of living while lowering the cost of living and setting examples for the whole country. Philadelphia will become a vast satisfaction to residents and a powerful example to the world.How do we begin?

* Public meeting to form 501(c)3 to operate within Pennsylvania Associations Law and Federal SEC regulations * Create bylaws * Elect board * Solicit donations and investments * Prioritize utilization of funds * Issue RFPs to form new businesses * SEC public meetings elect first members and gather data

REQUESTS FOR PROPOSALS

In all cases, priority to local workers and materials, local/regional manufacture, acception local/regional credits:

Soundprooofing enables people to live at greater density with less stress

* Lightweight, ease of installation

Import Replacement CenterCommunity Currencies could donate local money at-cost to local government and nonprofits, enabling millions of dollars of services to be provided without raising taxes and without paying interest on bonds. HOURS would be welcome everywhere when government agrees to accept them for tax payment.PhilaHealthia

Glover teaches Metropolitan Ecology at Temple University, and is a "consultivist" for grassroots economic development. A community economist with a degree in City Management, he is the founder of community programs like Ithaca's HOURS local currency, Health Democracy, Citizen Planners, and the Philly Orchard project. www.paulglover.org

About Me

"Resolve to serve no more, and you are at once freed. I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer; then you will behold him, like a great Colossus whose pedestal has been pulled... away, fall of his own weight and break in pieces." -Etienne de La Boétie *Feel free to copy any posted material. Attributions to writers are recommended, but the commons prevail here.